RECENT INTERVIEW

Q: Why are renters upset, even protesting, about the Portland rental market and how does InterWest navigate those inquiries?

A: I think that they are frightened of the unknown. There have been large increases and complete evacuations of entire buildings. We try to keep communication open about costs going up and clarify our client's real intentions. As aggressively as our rents have increased, we still have the lowest rents on the west coast. The market is beginning to cool based upon the new supply of rental units, just like the law of supply and demand always causes.

Unintended Consequences

We landlords have been using this term a lot lately with Portland City Council Members, State Representatives and our State Senators as they hack away at Landlord/Tenant issues they believe need alteration. What do we really mean?

In my opinion, many times government officials think they can ramrod changes down peoples pocketbooks without regard to human behavior. People move away from pain and toward pleasure. Pretty simple really. Landlord/Tenant Laws, Regulations, Management Agreements, Lease Agreements all involve complex language (words have actual meaning) to regulate human behavior for the benefit of both parties. These are entered into willingly. How is is possible for a government regulation changing the Agreement after the fact possibly going to have anything but unintended consequences?

The indisputable laws of Supply & Demand are hard at work right now in the Portland Metro Area causing rent growth to slow to something more reasonable. There is a lot of building happening (increasing Supply) that is increasing the competition (lowering Demand) and things tend to level off from there. Whenever the government thinks they know better than the results achieved from the profit motive of private enterprise, it's a boondoggle. This always results from a lack of understanding of human behavior and will always have unintended consequences. How about approaching challenges with a few more incentives (moving toward pleasure) and many less penalties, regulations and controls (away from pain)?

You see, it's really very simple. That's what we mean by unintended consequences.

James Keller

"A candle loses nothing by lighting another candle".

MARK TWAIN

"Give each day the chance to become the best one in your life".

RANDOM THOUGHTS ABOUT OUR CRAZY BUSINESS

Tenants are normally unhappy after their move out if they don't get all of their security deposit returned. It is very rare that a rental is returned in absolutely rent-ready condition (less a little normal wear and tear). Moving tenants are pretty tired after all that activity and cleaning the place spotless becomes less of a priority. It's human nature and it's understandable.

Just imagine if car rental companies charged you for not washing the rental car upon return. Why don't they? Because they don't take a security deposit to make sure it is done, because you bring it to the location where it will be washed (cheap) and because they build that service into their pricing model to begin with anyway.

OREGON STATE LEGISLATIVE SESSION

Well, we are in full swing this 2017 session. Representatives and Senators seem to be finding ways to intrude upon the sanctity of the private contract (rental agreement) between a Landlord and a Tenant and impose their will. Why is it perfectly acceptable for them to change terms regarding notices allowed, rent increase amounts, handling security deposits and tenant relocation penalties to landlords; but apparently the public contract (collective bargaining agreement) is untouchable? My understanding is that every fix proposed for the PERS disaster is being struck down because it would be in violation of the Public Employee Union's contract negotiated with the State. Again, why can't the terms and conditions simply be thrown out for the good of the public?


In 1943, a New York Supreme Court judge held:
To tolerate or recognize any combination of civil service employees of the government as a labor organization or union is not only incompatible with the spirit of democracy, but inconsistent with every principle upon which our government is founded. Nothing is more dangerous to public welfare than to admit that hired servants of the State can dictate to the government the hours, the wages and conditions under which they will carry on essential services vital to the welfare, safety, and security of the citizen. 

I rest my case......PLEASE CLAP
 

2016 year in review The Good, The Bad and The Ugly

 

2016 The Year In Review

And why you will continue to need us for many years into the future!

The Good:

A Zillow report released in spring found that our area was among the top five “hottest” rental markets in the nation. Rent increases were high, housing supply remains low, employment remains high and the odds of anything changing quickly is low.

Our close association with Multifamily NW helped develop the Equitable Housing PAC. Our first goal is to raise significant funds to provide support for legislative candidates who see things our way. They must realize that the radical changes proposed are foolhardy as they only disrupt the market and produce absurd and harmful results for everyone. Two harmful bills were defeated in the last short-session of the legislature, although we do expect tenant advocates to reintroduce these issues in the 2017 legislative session. Included in these victories for us were defeating the requirement that landlords pay the tenant relocation assistance of one month’s rent, the presumption of retaliatory actions within 6 months after a tenant’s report regarding maintenance and language regarding unreasonable harassment of a tenant by a landlord.

As eventually agreed to as “Good”, Inclusionary Zoning was viewed as not being rent control, but grants certain benefits to builders and developers (low or no cost permits and developer fees, tax breaks, etc…) in exchange for setting aside a certain portion of a development for affordable housing. The city or county may not require more than 20% of a development be affordable.

The Bad:

The following concessions were made to the tenant advocates in the short session. For month-to-month tenancies, no rent increases allowed in the first year. Rent increases require a 90-day written notice after the first year of occupancy.

The Community Alliance of Tenants declared a “Renter State of Emergency”; prompting the Portland City Council and the Oregon Legislature to approve many increased renter protections and to focus upon many others for the future.

Portland Metro continues to be the 15^th most expensive rental market in the nation. Competition for contributing members of our communities include places where the quality of life is fairly high, but rents are actually dropping like Baltimore, Anchorage, San Antonio, Des Moines, El Paso and others.

 

The Ugly:

On September 1^st, police began a sweep of the homeless camps along Portland’s Springwater Corridor. This massive relocation of homeless people had many unintended consequences. The homeless moved to camps on the streets, sidewalks and parking lots throughout the city. Squatters ended up in abandoned homes and vacant rentals (broken windows and kicked in doors). Many parked vehicles ended up with people living inside of them. This is a constant game of Whack-A-Mole.

Beginning April 1, 2017 at the direction of DEQ, Metro will implement screening requirements for additional types of construction materials arriving at their transfer stations. The new materials that will require testing for asbestos include drywall, interior textures, insulation, stucco, roofing materials, glazing compounds, vapor barriers and cement. This process is in addition to the current screening for lead based paint, vinyl flooring, etc… With all these new regulations it’s almost illegal to go to the dump.

Portland City Council and the Oregon State Legislature seem to be in a battle of who can be the most sympathetic to the plight of the downtrodden. They both seem to ignore existing laws to consider enacting versions of rent control (perhaps limit increases to a certain percentage), adopt plans for rent stabilization schemes and/or repeal all city, county and statewide bans on rent control. They really hate the best instrument for control that landlords utilize—the No Cause Notice. This tool in our toolbox has a bullseye on its back.

Saving the best for last, in 2017 the City of Portland is planning on creating a landlord registration including mandatory rental inspections and oversight of applications and contracts. To pay for the programs, the City will assess a surcharge to all landlords. This is nearly identical to the process enacted in Gresham over the last few years. However, the Portland City Council is much more adept at creating a large infrastructure of regulation, administration and inspection supported by a projected new tax funding of seven million dollars annually. From an outside point of view regarding the creation of these new bureaucratic kingdoms; when they cannot effectively operate a complaint driven inspection system in order to eradicate slumlords, what real purpose (other than perpetuating itself) is served by registering, taxing and inspecting every property?

 

We continue to fight the good fight on your behalf. Every year will always have its share of challenges and our job is to help you navigate through them.

Comments or questions call or e-mail Bob Johnson.
503-256-2323 ext. 104
Bob@inter-west.com

Your Professional Property Management Firm Since 1984